GlobalFoundries Inc. CFO John Hollister Discusses Growth Strategies and Market Outlook at JPMorgan's 53rd Annual Technology, Media, and Communications Conference

Key Takeaways

TL;DR: GlobalFoundries(GFS) anticipates 2025 growth driven by Automotive (mid-teens), CID (high-teens w/ silicon photonics & satellite comms), and strategic fab diversification. Key focuses: ~30% exit GM (40% LT target), $1B+ FCF, and tariff-resilient ops (<$20M impact).

1. End Markets & Growth Drivers

• Automotive:
  • 15% growth in 2024 ($1B+ rev.), mid-teens growth expected in 2025. Drivers: 40nm MCUs, 22FDX for radar (ADAS), and power mgmt. (BCD tech).
• CID (Comms/Data Center):
  • High-teens growth target for 2025; Q1 CID rev. +45% YoY.
  • Silicon photonics (AI-driven data center optics) and satellite comms (ground terminals/chips) as key drivers. CPO (co-packaged optics) potential by 2027.
• Smart Mobile: Flat 2025 outlook; AI upgrades & RF/content gains (haptics, imaging) could offset weak unit growth.

2. Manufacturing & Tariff Resilience

• Global Footprint: U.S. (Malta, Burlington), Singapore, Germany (No China/Taiwan exposure).
• Tariff Impact: $20M annualized input cost exposure (chemicals); limited risk. Post-liberation day, uptick in customer interest due to regionalized ops.
• Malta Fab Transition: Multi-year shift to specialty nodes (e.g., 22FDX, GaN). Production readiness in 2026; backed by CHIPS Act.

3. Financial Profile

• Gross Margin: Targeting ~30% exit 2025 (Q1: 24%). Drivers:
  • Depreciation roll-off (~$250M in 2025 vs. 2024 → +3-3.5%p GM).
  • Utilization (5% Δ = 200bps GM; Q1: 80%), mix (CID margin accretive).
• FCF: $1.1B in 2024; 2025 target ≥$1B. LT FCF margin upside from GM/opex leverage.

4. Competitive Positioning

• 90% sole-source design wins; tech differentiation (PIC, RF, BCD) and global resilience key.
• CapEx $700M (2025): Maintenance/upgrades (Malta diversification, Burlington GaN), no major capacity adds.